United CFO Rainey Implies Certain Elites were "Over Entitled".
May 19, 2012, 11:47 am
#46
Join Date: Sep 2010
Location: San Francisco Bay Area
Posts: 5,825
Interesting commentary by John Rainey...
"Consolidation has been an unalloyed good for this industry"
"Everything we do at United is with the mindset of creating economic value"
"Broad business centric network - #1 or #2 in all markets"
"Annual interest expense dropped $200M over past 3 years"
"Consume 4 Billion gallons of fuel / year" "Fuel 35 - 40% of cost structure - largest single item"
"Diverse fleet provides flexibility - redeploy planes to improve capacity mgmnt (eg 737 / 320 between IAH and ORD)"
"Continued capacity discipline - 1.5% reduction in 2012 - Capacity down 6% since 2006"
SHARES conversion: "Single largest technology migration in the history of aviation"
With SHARES: "Ability to dynamically price ancillary products - eg E+"
"SHARES is a great system"
MileagePlus: "We had certain groups that were overentitled, if you will"
"More members in MP than there are citizens of France"
"80% complete on lie flat seat upgrade program"
"Global wifi installation starting in August - yes, we're late to market but we're excited about our offering"
"Fundamentally, we are a customer service business"
Q&A
"Hindsight is 20/20, but, we underestimated peoples capacity to absorb change"
"Making good progress in unifying labor contracts"
"Marginal hubs (CLE and DEN) - In DEN, recently a new agreement with city which reduced costs. CLE - capacity has been 'right sized' (reduced)"
698 planes today, avg life 25 years. Replace 28 planes per year to maintain fleet.
Deploy capital / CAPEX in places where it justifies the spending when acquiring new planes.
"Need to continue to reduce debt, and improve the quality of the remaining debt. Not in a position to prepay more debt now though."
"2 years ago, $1B in annual interest expense. Today, $750M annual expense."
"Too much capacity in China market (see Cathay comments?), planning to reduce capacity in this market"
"Switched to new revenue management system in December - Orion"
IFE: "Clearly, customers want to be entertained in flight." "But, it costs $5 - $10 K per screen for seat back screens..." "Passengers bringing their own screens now - Pads / Tablets - support the infrastrucutre / wifi to enable people to consume content on their own devices"
"Long term, look for ways - sponsorship / advertising - to enable them to not charge for wifi"
"Making a big bet in data mining capability to get better at marketing specific packages and upsells to specific customers"
"More technology and more self service capabilities in the airports"
"Everything we do at United is with the mindset of creating economic value"
"Broad business centric network - #1 or #2 in all markets"
"Annual interest expense dropped $200M over past 3 years"
"Consume 4 Billion gallons of fuel / year" "Fuel 35 - 40% of cost structure - largest single item"
"Diverse fleet provides flexibility - redeploy planes to improve capacity mgmnt (eg 737 / 320 between IAH and ORD)"
"Continued capacity discipline - 1.5% reduction in 2012 - Capacity down 6% since 2006"
SHARES conversion: "Single largest technology migration in the history of aviation"
With SHARES: "Ability to dynamically price ancillary products - eg E+"
"SHARES is a great system"
MileagePlus: "We had certain groups that were overentitled, if you will"
"More members in MP than there are citizens of France"
"80% complete on lie flat seat upgrade program"
"Global wifi installation starting in August - yes, we're late to market but we're excited about our offering"
"Fundamentally, we are a customer service business"
Q&A
"Hindsight is 20/20, but, we underestimated peoples capacity to absorb change"
"Making good progress in unifying labor contracts"
"Marginal hubs (CLE and DEN) - In DEN, recently a new agreement with city which reduced costs. CLE - capacity has been 'right sized' (reduced)"
698 planes today, avg life 25 years. Replace 28 planes per year to maintain fleet.
Deploy capital / CAPEX in places where it justifies the spending when acquiring new planes.
"Need to continue to reduce debt, and improve the quality of the remaining debt. Not in a position to prepay more debt now though."
"2 years ago, $1B in annual interest expense. Today, $750M annual expense."
"Too much capacity in China market (see Cathay comments?), planning to reduce capacity in this market"
"Switched to new revenue management system in December - Orion"
IFE: "Clearly, customers want to be entertained in flight." "But, it costs $5 - $10 K per screen for seat back screens..." "Passengers bringing their own screens now - Pads / Tablets - support the infrastrucutre / wifi to enable people to consume content on their own devices"
"Long term, look for ways - sponsorship / advertising - to enable them to not charge for wifi"
"Making a big bet in data mining capability to get better at marketing specific packages and upsells to specific customers"
"More technology and more self service capabilities in the airports"
May 19, 2012, 11:48 am
#47
Join Date: Dec 2007
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Skypesos
I get that. But to someone like
Me who rarely redeems on flights- i tend to use my
Miles for other things- it's not that bad.
I would say that for most elites, particularly those that fly 100K+ a year paid, upgrades are generally the most important part of the program to them because they are spending a lot of time inside the aircraft
Originally Posted by Doc Savage
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Delta made money last quarter. Somehow they can offer more seats in F, a more generous upgrade policy, more IFE, better on-time rates and make more money than the penny pinchers at UA. Shocking
Delta made money last quarter. Somehow they can offer more seats in F, a more generous upgrade policy, more IFE, better on-time rates and make more money than the penny pinchers at UA. Shocking
Me who rarely redeems on flights- i tend to use my
Miles for other things- it's not that bad.
I would say that for most elites, particularly those that fly 100K+ a year paid, upgrades are generally the most important part of the program to them because they are spending a lot of time inside the aircraft
May 19, 2012, 11:49 am
#48
FlyerTalk Evangelist
Join Date: Jan 2003
Location: Brooklyn, NY, USA
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The majority of Elite customers are business travelers - and the majority of business travelers are required by policy to book the lowest available airfare.
If UA is unhappy about Elite customers purchasing low fares, they have an existing avenue to change that - stop offering such low fares and/or increase the price or push the lowest fares out past 21 days when business travelers are unlikely to be booking...or push the lowest fares to a Delta-esque E Class scheme where companies would normally exempt their employees from purchasing due to the inflexible rules.
It makes no sense for executives to sit there and whine about a situation they created....and honestly, the number of 1Ks and Platinums who get their status flying (generally non-existent) $300 transcon fares or hyper-segment mileage runs is a tiny fraction of the overall population, not even something that would register on UA's radar.
If UA wants to restrict its best benefits for high-spending flyers, don't they already do that? The Global Services program gives high-spenders first crack at upgrades and other exclusive benefits.
If UA is unhappy about Elite customers purchasing low fares, they have an existing avenue to change that - stop offering such low fares and/or increase the price or push the lowest fares out past 21 days when business travelers are unlikely to be booking...or push the lowest fares to a Delta-esque E Class scheme where companies would normally exempt their employees from purchasing due to the inflexible rules.
It makes no sense for executives to sit there and whine about a situation they created....and honestly, the number of 1Ks and Platinums who get their status flying (generally non-existent) $300 transcon fares or hyper-segment mileage runs is a tiny fraction of the overall population, not even something that would register on UA's radar.
If UA wants to restrict its best benefits for high-spending flyers, don't they already do that? The Global Services program gives high-spenders first crack at upgrades and other exclusive benefits.
In their view, it would appear to me, they are simply tweaking their product, as they have every right to do. If what they're doing is wrong and it ends up costing them, I would expect they would return to "over entitling" their elites.
But as far as inexpensive fares, my impression is CO dba UA is much more excited to sell inexpensive fares to anyone (including elites) even for close-in purchases, than to provide perks to elites, many of whom achieve their status by buying inexpensive fares and end up using the program as little more than a discounting scheme.
Again, I'm not saying they're right, but that's pretty much the standard PMCO approach.
May 19, 2012, 11:49 am
#49
Join Date: Apr 2006
Location: ASE
Programs: UA 1MM, AA1MM PLTPRO, Hertz PC, National EXC, Hyatt Explorist, Hilton/Marriott Gold, IHG Platinum
Posts: 3,357
I'm predicting that this will become one of the most important threads on this forum this year. As I stated earlier, I personally feel that it speaks volumes about the COdbaUA mindset. All elites should be outraged by this statement, and, excepting locations with no other alternative, I strongly suggest that people vote with their feet and move their business from UA. This type of behavior should not be tolerated.
May 19, 2012, 11:50 am
#50
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I agree. Its the last straw for me.
Originally Posted by UAPremierGuy
I'm predicting that this will become one of the most important threads on this forum this year. As I stated earlier, I personally feel that it speaks volumes about the COdbaUA mindset. All elites should be outraged by this statement, and, excepting locations with no other alternative, I strongly suggest that people vote with their feet and move their business from UA. This type of behavior should not be tolerated.
May 19, 2012, 11:51 am
#51
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Location: San Francisco/Tel Aviv/YYZ
Programs: CO 1K-MM
Posts: 10,762
Fine, if they don't want $300 tickets to contribute to 1K status, then don't allow EQM accumulation on <W/V fares, whatever.
Incidentally, he shovels it on in Slide 16 "Benefits of SHARES" :
- aircraft redeployment, network optimization(?)
- Shortened time-tomarket for ancillary products/services (? FALSE)
- Dynamic ancillary pricing (ToD, Bull...)
- Simple loyalty program with BETTER elite differentiation (huh?)
follows on to say growing high margin business like our "Leading loyalty program".
Working together culture (see F/As, ALPA Strike)
Direct, Open & Honest communcation (bald face lie)
Dignity and Respect ("Over entitled", bald face lie).
So, Rainey is a liar. $misek is a liar. Frankly, the airline ought to be sued for lying to their investors.
Incidentally, he shovels it on in Slide 16 "Benefits of SHARES" :
- aircraft redeployment, network optimization(?)
- Shortened time-tomarket for ancillary products/services (? FALSE)
- Dynamic ancillary pricing (ToD, Bull...)
- Simple loyalty program with BETTER elite differentiation (huh?)
follows on to say growing high margin business like our "Leading loyalty program".
Working together culture (see F/As, ALPA Strike)
Direct, Open & Honest communcation (bald face lie)
Dignity and Respect ("Over entitled", bald face lie).
So, Rainey is a liar. $misek is a liar. Frankly, the airline ought to be sued for lying to their investors.
May 19, 2012, 11:53 am
#52
FlyerTalk Evangelist
Join Date: Jan 2003
Location: Brooklyn, NY, USA
Programs: DL SM Plat, B6 TrueBlue, UA MP, AAdvantage
Posts: 10,008
I'm predicting that this will become one of the most important threads on this forum this year. As I stated earlier, I personally feel that it speaks volumes about the COdbaUA mindset. All elites should be outraged by this statement, and, excepting locations with no other alternative, I strongly suggest that people vote with their feet and move their business from UA. This type of behavior should not be tolerated.
Not that it really matters to elites leaving the airline.
But if you would leave CO dba UA in order to send a message to management, I'm afraid the message they get will not be the one you intended...
May 19, 2012, 11:54 am
#53
FlyerTalk Evangelist
Join Date: Nov 2007
Location: Denver • DEN-APA
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Posts: 21,601
May 19, 2012, 11:54 am
#54
Suspended
Join Date: Oct 2006
Location: Atherton, CA
Programs: UA 1K, AA EXP; Owner, Green Bay Packers
Posts: 21,690
Yep, pretty clearly this terminology is routinely used around COdbaUA as it tripped so nimbly off his lips. I am betting he is kicking himself for his candor. Now we all know for sure what we are fighting against.
Last edited by iluv2fly; May 19, 2012 at 4:07 pm Reason: unnecessary
May 19, 2012, 11:54 am
#55
Join Date: Dec 2007
Location: Las Vegas
Programs: DL Platinum, AA Lifetime Gold, Hilton Diamond, Marriott Platinum, Radisson Premium
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Getting tired of them bragging about MP program. This is the Onepass program renamed. It was MP that earned all the awards- not OnePass. And I think we all can now tell why!
Honesty to them means telling people they're "over entitled"
Originally Posted by entropy
Fine, if they don't want $300 tickets to contribute to 1K status, then don't allow EQM accumulation on <W/V fares, whatever.
Incidentally, he shovels it on in Slide 16 "Benefits of SHARES" :
- aircraft redeployment, network optimization(?)
- Shortened time-tomarket for ancillary products/services (? FALSE)
- Dynamic ancillary pricing (ToD, Bull...)
- Simple loyalty program with BETTER elite differentiation (huh?)
follows on to say growing high margin business like our "Leading loyalty program".
Working together culture (see F/As, ALPA Strike)
Direct, Open & Honest communcation (bald face lie)
Dignity and Respect ("Over entitled", bald face lie).
So, Rainey is a liar. $misek is a liar. Frankly, the airline ought to be sued for lying to their investors.
Incidentally, he shovels it on in Slide 16 "Benefits of SHARES" :
- aircraft redeployment, network optimization(?)
- Shortened time-tomarket for ancillary products/services (? FALSE)
- Dynamic ancillary pricing (ToD, Bull...)
- Simple loyalty program with BETTER elite differentiation (huh?)
follows on to say growing high margin business like our "Leading loyalty program".
Working together culture (see F/As, ALPA Strike)
Direct, Open & Honest communcation (bald face lie)
Dignity and Respect ("Over entitled", bald face lie).
So, Rainey is a liar. $misek is a liar. Frankly, the airline ought to be sued for lying to their investors.
Honesty to them means telling people they're "over entitled"
May 19, 2012, 11:54 am
#56
Join Date: Jun 2004
Location: San Diego
Programs: IHG Spire Amb, HH Diamond, DL Diamond and 1MM
Posts: 3,610
Personally, I think high-mileage and low-fare paying customer do bring lots of incremental revenue to an airline by using up excess (cheap) seat capacity and forcing others to buy higher fare buckets. I've seen the contrary case argued often at FT. In one sense, it does not matter to us, the flyers. There will ALWAYS be an airline who values high mileage customers. We are airline customers, not stockholders.
No need to help a airline see the mistake of its business decisions when it is so much easier to walk over to the competition.
I think you all get that United 1K's and GS's are being hosed.
I am surprised that United mid-tiers are not equally upset. Only a 50% bonus on redeemable miles for United 50k flyers, and 75% bonus for 75k flyers. It's still 100% for the equivalent at Delta or American.
Why waste time hoping United will change? Just choose between American and Delta, and be done with it!
May 19, 2012, 11:55 am
#57
FlyerTalk Evangelist
Join Date: Jan 2003
Location: Brooklyn, NY, USA
Programs: DL SM Plat, B6 TrueBlue, UA MP, AAdvantage
Posts: 10,008
Incidentally, he shovels it on in Slide 16 "Benefits of SHARES" :
- aircraft redeployment, network optimization(?)
- Shortened time-tomarket for ancillary products/services (? FALSE)
- Dynamic ancillary pricing (ToD, Bull...)
- Simple loyalty program with BETTER elite differentiation (huh?)
- aircraft redeployment, network optimization(?)
- Shortened time-tomarket for ancillary products/services (? FALSE)
- Dynamic ancillary pricing (ToD, Bull...)
- Simple loyalty program with BETTER elite differentiation (huh?)
In actuality, everything he is saying is exactly what you think of SHARES, namely that it makes the experience worse and more costly for the customer.
That's its purpose...the only difference is that, in his estimation, that's good for the company.
May 19, 2012, 11:56 am
#58
Join Date: Oct 2010
Location: Santa Barbara, CA
Posts: 1,277
I fail to see how someone flying 25K a year was "over entitled" to get more than one free checked bag when someone with a credit card with a $395 annual fee gets a Club membership valued at $475 AND two free checked bags.
Honestly, as a silver never expecting to get upgrades, the bags and E+ were the two things I cared about most.
Honestly, as a silver never expecting to get upgrades, the bags and E+ were the two things I cared about most.
May 19, 2012, 11:57 am
#59
Join Date: Oct 2011
Location: DEN/OGG
Programs: UA GS
Posts: 1,482
Dedicated GS line gone or answered by total newbies
GS email answered in 3 weeks or more
GS service at airports non existent any longer
GS dedicated agents on international flights hardly there any longer
GS pre boarding only on paper ( maybe 1 out of 10)
GS meal choice the same (2 out of 10 for me on paid F)
Upgrades AFTER TODs or not at all. Last week on UA125 3 F seats were open after boarding. GA pulls 3 people up, non 1k or GS; they were very surprised themselves a GS from E+ stood up and complained. GA ignored him.
GS is just a very expensive version of silver but with better luggage tags
May 19, 2012, 11:58 am
#60
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Again, you're looking at it from the customer's point of view.
In actuality, everything he is saying is exactly what you think of SHARES, namely that it makes the experience worse and more costly for the customer.
That's its purpose...the only difference is that, in his estimation, that's good for the company.
Oh it is? Tell me how profitable was COdbaUA last quarter compared to Delta, who actually upgrades their elites and provides the plane w/ lots of IFE.. Or even AA for that matter?
The blatant COdbaUA apologism doesn't work when the facts don't fit what you're saying
Originally Posted by TWA Fan 1
Incidentally, he shovels it on in Slide 16 "Benefits of SHARES" :
- aircraft redeployment, network optimization(?)
- Shortened time-tomarket for ancillary products/services (? FALSE)
- Dynamic ancillary pricing (ToD, Bull...)
- Simple loyalty program with BETTER elite differentiation (huh?)
- aircraft redeployment, network optimization(?)
- Shortened time-tomarket for ancillary products/services (? FALSE)
- Dynamic ancillary pricing (ToD, Bull...)
- Simple loyalty program with BETTER elite differentiation (huh?)
In actuality, everything he is saying is exactly what you think of SHARES, namely that it makes the experience worse and more costly for the customer.
That's its purpose...the only difference is that, in his estimation, that's good for the company.
The blatant COdbaUA apologism doesn't work when the facts don't fit what you're saying